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Protocol Index: COVID’s killing travel tech

Protocol Index

Good morning! This Friday, travel tech shows us just how bad things are, what we've learned from earnings season, and what Tesla employees think of Elon's tweets. Want Index in your inbox each morning? Subscribe here.

What Matters Today

  • 5:30 a.m. PDT: April's jobs report will spell out the full impact of one of the worst months in U.S. economic history. Economists expect 22 million job losses for the month, with the unemployment rate set to hit 16%. Unlike weekly claims data, the monthly report also includes sectoral breakdowns. Tech is likely to have fared better than other sectors, but it won't come out unscathed.

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Today's News

As of 4:45 a.m. PDT: Nasdaq Futures: 0.99% | Euro 600: 0.72% | Nikkei: 2.56% | Hang Seng: 1.04%




Diving Deeper

Travel tech: There's bad, then there's really bad

It's hard to think of a tech subsector more exposed to this crisis than travel tech, and Thursday gave our first sense of just how badly it's been hit.

  • Booking Holdings, which owns, Kayak and Priceline (among others), reported earnings that missed already low estimates.
  • Room night reservations were down 43% year-on-year last quarter vs. the 29% drop analysts had expected. And gross travel bookings were down 51%.
  • Making matters worse, room night bookings were down more than 85% year-on-year in April — compared to a 60% decline in March. It's pretty clear that the current quarter is going to be even worse than last quarter.

And if you thought that was bad, wait until you see TripAdvisor's results.

  • It estimated revenue fell more than 90% in late March, a trend that continued in April. Last quarter, revenue was down 26%, compared to Booking's 19% decline.

A report from Deutsche Bank this week explains that TripAdvisor's relatively poor performance will likely worsen still.

  • Booking is an online travel agency, or OTA: It makes money when you book a hotel stay. So as travel begins to rebound, it can recover.
  • TripAdvisor, meanwhile, is a "metasearch provider," making money from ads that the OTAs run on its site.
  • Deutsche Bank thinks the "core hotel metasearch business will recover slowly and to lower levels than pre-crisis, as market share consolidates among large OTAs and ad auctions are structurally less competitive." With smaller OTAs set to go out of business, ad prices will decline — benefiting the remaining OTAs, and hurting metasearch providers.
  • That's bad news for Google, which is also a metasearch provider.

Still, it's not like Booking will come out unscathed. Deutsche Bank forecasts 2021 room night reservations to be 75% of 2019 levels, saying it doesn't think travel will fully recover until the second half of 2022.


  • "This funding is going to be sufficient for us to weather the downturn and come back and compete." — Lime CEO Wayne Ting told Protocol's Biz Carson that its new cash will help it fight back to its previous lofty valuation. He also said "we're going to see some level of consolidation" in micromobility.
  • "Tech fatigue." — That's how Bank of America analysts explained this week's stock market performance. Tech stocks saw their first week of outflows this year, according to the analysts.

Everyone's Thinking About

Earnings learnings: Big tech is fine, for now

Most big tech companies have now reported their earnings, and a fairly positive picture has been painted.

  • The S&P Info Tech Index, led by Microsoft and Apple, is up almost 3% for the year, compared to a 10% loss on the S&P 500. That's a sign of tech's resilience amid a crisis that's upturned the entire economy.

Here are some of the main things we've learned:

  • Ecommerce is having a moment. Amazon's revenue was up 26% year-on-year, while gross merchandise volume on Shopify's platform rose 46%. But it's yet to be seen if that trend can continue as household income shrinks.
  • The cloud has never mattered more. Cloud providers such as Microsoft, Alphabet and Amazon all reported huge increases in cloud usage, with corresponding revenue boosts. This pandemic has accelerated companies' moves to the cloud, and providers are set to clean up as a result.
  • And chipmakers are benefiting as a result — which makes up for the corresponding declines they're seeing in consumer tech.
  • Diversification has stood out as a major advantage. Whether it's breadth across geographies or sectors, having more than one business line is proving to be a major strength.

But the main thing? Things are probably going to get worse.

  • The first quarter ended in March — just a couple weeks after the U.S. economy started to shut down. That means that this earnings season offered only a taste of what's to come.
  • We're on the cusp of mass defaults and bankruptcies, and tech will be affected. And with no end to this crisis in sight, things could get an awful lot worse before they get better.

I wrote more about all this: Read it here.

Closing Bell

Tesla employees think Elon's tweets are bad

I've always wondered how Tesla staff find Elon Musk; they are, after all, financially dependent on his behavior. Thankfully, social network Blind conducted a highly unscientific poll of 50+ employees to see what they think. The results: 54% think Musk's tweets harm the company, and 11% think he's an internet troll; 26% think he's a genius; and 44% think he's an internet troll, a genius and misunderstood all at the same time. Having watched some of his latest Joe Rogan interview, I think that seems fair.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Have a great weekend, see you Monday.

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